Why Capital Account Is Shown In Asset Side
Is It Possible To Show Capital On Asset Side Of A Balance Sheet? Usually, the Capital Account Is Shown On Liabilities & Equity Side of a balance sheet. However, there are possibilities due to which Capital Account is appeared on asset side of balance sheet. In that case, the capital account is called a negative capital account and it is not a good sign for the Stability of A Business as it has less capital to invest, to meet daily obligations and ultimately the business will surely face a heavy loss or even may be closed at the end. Such possibilities are shown below: (i) Due To Net Loss As the business suffered a Loss during the accounting period, so we get negative capital. In such case, the owners of the business must do serious steps to stabilize their businesses. For example, Mr. A is a sole proprietor has negative capital during the period. From his financial statements, we get the following information: ...